I’ve been so busy lately it has been hard to find time to post. Jack has been with us more than a month at this point. Here he is at 12 weeks. His ears are starting to come up. He doesn’t look so much like a baby any more.

Puppies are a lot more work nowadays than they seemed to be 20 years ago. On the other hand we are much better trainers than we were 20 years ago.

That’s my question. What will happen in the Russia-Ukraine War? And how do you know?

I honestly have no idea. To my eye it looks like the war will go on for the foreseeable future with no clear winner and both sides claiming victory. At this point practically all of the coverage of the war consists of press releases.

I also believe that the Germans will find some reason or other for not fulfilling their pledge to stop buying Russian oil and gas but that’s a different subject.

At The American Institute for Economic Research Caleb Fuller argues that we should just let the market decide on fully autonomous vehicles:

Discussions of how regulation could “get in front of” self-driving cars are therefore incomplete, and ultimately, may cost lives. According to the National Highway Traffic Safety Administration, over 42,000 people perished on U.S. roads in 2021. What that implies is that self-driving cars would be an improvement if, with autonomous vehicles widely prevalent, “only” 41,000 people were to perish in car accidents.

To put this even more starkly, were those numbers accurate, it would imply that every year regulators delay because driverless cars are not yet perfectly safe, they would be killing a thousand people on net.

My point is not that I know what these numbers are, nor am I an expert on the regulatory hurdles these vehicular innovations must overcome. Rather, I wish to make the more general, conceptual point that net deaths may occur due to regulators’ insisting on making self-driving cars safer.

Ex ante regulation of the type being discussed for driverless vehicles, stipulates ahead of time the specifications a product must comply with. It necessarily invokes an arbitrary set of safety standards. It also short-circuits the local, tacit knowledge that producers have about how to make their products or production processes safer. Ironically, safety regulation can make us less safe, for precisely this reason.

I don’t know how to navigate the trade-offs inherent in creating a risky product (i.e. any product). Neither do you. But markets do.

I’m going to divide my remarks into three sections: vehicle autonomy, liability, and proposals.

The international Society of Automotive Engineers (SAE) has devised the following classification scheme for vehicle autonomy, levels from 0 to 5:

Level 0 No automation
Level 1 Driver assistance
Level 2 Partial automation
Level 3 Conditional automation
Level 4 High automation
Level 5 Full automation

Presently, most “autonomous” vehicles are at Level 2 or Level 3; Waymo claims to have built a vehicle at Level 4. In 2010 I made a cash wager that there would be fewer than 10 street legal Level 5 vehicles on the road in the United States by 2020. I collected. Level 5 vehicles are not expected for 10 to 20 years but I wouldn’t be a bit surprised if fully autonomous vehicles are not added to the list of things which, like practical nuclear fusion, always seem to be 10-20 years away. I note that the most recent success with nuclear fusion which appeared tantalizingly successful, does not appear to be reproducible.

In terms of liability nearly all automobile accidents are the result of driver error. The balance are either manufacturer defect or act of God. To the best of my knowledge those are the alternatives—there aren’t any others.

Volvo has, correctly in my view, taken the position that all automobile accidents involving autonomous vehicles are the result of a failure of workmanship.

Now to my proposal. IMO Mr. Fuller is wrong in one particular. There is a fundamental difference between motor vehicle accidents involving ordinary vehicles and those involving autonomous vehicles. As long as the vehicles are being operated according to manufacturer recommendations and the vehicles are maintained according to manufacturer recommendations all accidents involving autonomous vehicles are the result of a failure of workmanship on the part of the manufacturer which, as I note, is the view taken by Volvo.

Therefore my proposal can be summed up in two words: strict liability. Manufacturers should be held strictly liable for all accidents involving autonomous vehicles. That means that no motive or recklessness need be proven. Only that there was an accident.

So, in a sense, I’m coming down on the same side as Mr. Fuller. The market can handle it. But only if it must. Insurance companies are not charitable organizations. When there’s no practical way an owner of a flawed vehicle can prove that the vehicle was at fault and nothing that owners can do (other than not owning an autonomous vehicle) to avoid liability, any accident involving them will be blamed on the owner and not covered by the insurance company. Or insuring those vehicles will be prohibitively expensive. It will strongly discourage the ownership of autonomous vehicles. Consequently, strict liability on the part of manufacturers is a good way to encourage the development, sale, and purchase of autonomous vehicles, getting the benefits of autonomous vehicles that Mr. Fuller notes.

In an op-ed in the Wall Street Journal Elbridge A. Colby and Alexander B. Gray underscore a point I have been making for some time—the U. S. has a major security problem in that it is too reliant on other countries for materials it needs to fight a lengthy war:

The war in Ukraine should galvanize Washington policy makers. It has demonstrated that America’s defense-industrial base isn’t up to the job of supplying the U.S. military with weapons for a prolonged conventional conflict with a major power such as China. Production lines for Stinger and Javelin missiles destined for Ukraine are stretched to capacity, with critical components no longer produced in sufficient quantity to meet demand.

The industrial competencies required for sustained conventional warfare have atrophied. In 2018 the Trump administration identified nearly 300 significant gaps across 10 “risk archetypes” in the defense industry, such as reliance on a foreign supplier, that could directly undermine the U.S. military’s ability to fight a major war. The causes of these gaps vary and are subject to debate. They range from the general decline of domestic manufacturing to Congress’s failure to ensure a predictable defense-funding cycle and from the predatory industrial policies of other nations to an assumption that America’s future wars would be quick and decisive. Whatever the causes, the status quo is profoundly dangerous.

The issues they go on to cite include ship-building, maintenance, and logistical support. Not only do we are we lacking in those areas, we don’t produce enough steel. We don’t produce enough iron or coal to make the steel.

Consider just one group of products: computer memories. Forty years ago we produced most of the computer memories in the world. Now our production is relatively miniscule. And they’re used everywhere, not just in computers but in phones, vehicles, and all sorts of tools. I wouldn’t be at all surprised if, should a conflict continue for more than a couple of weeks, we would be reduced to doing what the Russians are reportedly doing—scavenging parts from the most unusual of sources.

These days most memories are produced in Taiwan using materials produced in China.

There’s a larger question as well. What sort of warfare are we preparing for? If you look at it from William Lind’s “generations of warfare” model, in just twenty or thirty years we’ve gone from being prepared primarily for 3GW to focusing so much on 4GW we are nearly unable to fight 3GW. That has implications.

One of those implications is that it limits your strategies. We aren’t prepared to fight a months or years-long war across the Atlantic or Pacific. And it would take use years to become prepared.

At Foreign Affairs Ryan Hass, looking at the bright side, sees a benefit in Speaker Pelosi’s visit to Taiwan:

Some argue that China’s recent actions would have happened sooner or later, regardless of whether Pelosi visited the island. Even if one accepts such debatable logic, Pelosi’s trip created a pretext for China to accelerate its plans. But now that the damage is done, it is imperative to focus on what comes out of this crisis. It is not inevitable that the situation in the Taiwan Strait is locked into a path of permanent deterioration. Taipei’s response has been calm and nonescalatory. With discipline and clarity on objectives, U.S. policymakers might still be able to seize the moment to arrest the slide in cross-strait relations and put Taiwan on a more solid footing.

and

Direct leader-level diplomacy is a requirement to ensure that each side knows the other’s concerns and requirements. Discipline and discretion are the currency of crisis management. Clever arguments without credible deterrence contribute little to managing challenges. And China’s leaders will not take steps to defuse tensions unless they believe their concerns are being heard.

concluding:

Even as Washington and Taipei demonstrate that they will not be intimidated into backpedaling on Taiwan’s security, they should also focus on lowering risks, bolstering deterrent capabilities, strengthening Taiwan’s footing, and advancing U.S.-Taiwan relations. Beijing’s overreaction to Pelosi’s visit has created opportunities for progress along these lines. Such opportunities should not be squandered.

Is that actually true? Were those opportunities not there before?

There are conflicting takes on the FBI search of Donald Trump’s Mar-a-Lago residence last week. From the editors of the New York Daily News:

There aren’t many government documents we wouldn’t like to see; the press is hardwired to seek transparency. But there are solid reasons for a judge to keep sealed the affidavit behind a FBI search warrant to comb Donald Trump’s quarters at Mar-a-Lago looking for highly classified documents he had failed to return to the National Archives.

After the Aug. 8 search, Trump screamed bloody murder and breathlessly fomented conspiracy theories about political persecution run amok. Though in possession of the search warrant and inventory of seized items, the former president chose not to publish those until after Attorney General Merrick Garland, calling his bluff, moved for them to be unsealed.

It was important for those two documents to be released. They have shown a skeptical public confused by Trump’s nonsense what in broad strokes authorities were after, what laws they thought had been violated, and what boxes they removed.

The affidavit, which Trump and his allies are now demanding be made public in full, and which the Justice Department opposes releasing, is another kettle of fish. It contains specifics on why the feds think evidence of a crime might have been on site, as well as details about the ongoing investigation that could well compromise it. The information might include the identities of witnesses — including whoever in Trump’s circle may have tipped off the feds.

but the editors of the Wall Street Journal make an additional observation:

On Friday Judge Reinhart released the warrant for the search after Attorney General Merrick Garland and Mr. Trump urged its release. The public gleaned some general information from the warrant and what was gathered but not enough to conclude if the unprecedented search of a former President’s home was justified. The affidavit almost certainly includes more detail about the legal and factual basis for the search.

The rub this time is that the Justice Department wants to keep the affidavit secret lest its release compromise the criminal investigation. But that’s what Justice and the FBI always say. Mr. Trump has called for the affidavit’s release, so the judge can’t claim any risks to the former President’s privacy.

Lindsey Graham, the South Carolina Senator, has also called for the affidavit’s release because “we’re flying blind in the dark.” He’s right. This is an extraordinary case, and the public interest is enormous. Mr. Trump may run for President again, yet he is vulnerable to leaks from the government that damage his reputation but may have little factual basis.

Last week someone told the Washington Post that Justice believes Mr. Trump had documents related to nuclear secrets, but the warrant revealed no such evidence. It did contain a reference to possible violation of the Espionage Act but again without evidence or elaboration.

We should add that Dow Jones & Co., the owner of this newspaper, has filed a motion with the court seeking the release of the affidavit. “Continued concealment is likely more injurious than disclosure,” the motion says, “as the nature of political discourse, which abhors a vacuum, has pumped all kinds of sensational suppositions into the informational void.”

I am still forming my opinion on the matter. As I’ve said before I think searches of this sort of the private residences and offices of presidents leaving office should be so routine as to not draw comment. On the other hand I don’t think that either the FBI as an institution or AG Merrick Garland should just be trusted. And I find government and politics by official leak to the press objectionable. But so are threats of violence against public officials. I don’t know where to draw the line.

At Foreign Policy Craig Singleton says that Speaker Nancy Pelosi’s visit to Taiwan backfired badly:

History is replete with unintended consequences, few of which mattered much. Not so in the case of U.S. House Speaker Nancy Pelosi’s recent layover in Taipei, Taiwan’s capital. The trip, which garnered rare bipartisan support in Washington, aimed to demonstrate U.S. confidence in Taiwan’s leadership. Instead, the visit and China’s reaction to it left the region reeling, with Beijing apparently more confident than ever that it could retake the self-governed island nation by force if necessary.

Simply put, Pelosi’s ill-timed gambit backfired—and badly. Worse yet, its destabilizing effect was entirely predictable and completely preventable, which explains why White House and U.S. Defense Department officials repeatedly requested that she postpone, not cancel, her travel to Taipei. Sure, Pelosi faced political pressure not to back down once her plans became public. But it was always clear that China would exact a high price for her meeting with Taiwanese President Tsai Ing-wen, which need not have taken place in Taiwan or coincided with the 95th anniversary of the founding of the Chinese People’s Liberation Army (PLA) to achieve its stated objective.

The House of Representatives has very little constitutional role in foreign policy. I honestly don’t understand why President Biden didn’t ground the official aircraft Speaker Pelosi used on the trip—it’s well within his authority. The explanations most obvious to me are that either he didn’t actually know anything about the trip (unlikely), he agreed with Speaker Pelosi, Speaker Pelosi made the trip at the president’s behest, or the president didn’t want to offend Speaker Pelosi.

Here’s an interesting amplification from later in the piece:

To be fair, Pelosi’s trip did not occur in a vacuum. Beijing and Washington have been talking past each other on the Taiwan issue since U.S. President Joe Biden assumed office, with each side believing that the other is unilaterally seeking to alter the status quo. Unquestionably, China has endeavored to find a reason—any reason—to justify its increasing belligerence toward Taiwan. But Beijing’s growing skepticism about Washington’s adherence to the “One China” policy can, in large part, be attributed to Biden’s repeated mischaracterization of the United States’ security commitments as outlined in the Taiwan Relations Act, including his claim that the United States has a “commitment” to aid Taiwan in the event of a Chinese invasion—whereas the act only requires Washington “to provide Taiwan with arms of a defense character” without any guarantee the United States will intervene militarily. Certainly, these gaffes do not excuse Beijing’s behavior. But the regime’s response to Pelosi’s trip—coming just months before a major Chinese Communist Party leadership shake-up—was hardly surprising.

That would certainly seem to lend some weight to my speculation that President Biden actually agreed with Speaker Pelosi. This is risky business.

President Biden has signed a slightly slimmed-down version of his “Build Back Better” bill called the Inflation Reduction Act into law. Brendan Cullerton reports:

WASHINGTON (Gray DC) – President Joe Biden signed the Inflation Reduction Act into law Tuesday, August 16.

Biden said measure will allow spending on combating climate change and improving healthcare at the expense of increasing taxes on large corporations and drug manufacturers.

“The American people won, and the special interests lost,” the president said.

The $750 billion extends subsidies as part of the “Affordable Care Act,” reduces Medicare drug prices, and provides tax credits for clean energy items like solar panels.

Let’s hope that the act achieves the objectives set for it.

One of the major developments that increasingly separates how modern businesses operate from the way that government operate is that projects that follow best practice have clear statements of their objectives (a “charter”) and ways of measuring whether they are accomplishing those objectives (“key performance indicators” or KPIs).

Identifying and committing to such details is rare in government programs. One of the consequences of that is that there are government programs that have been around for more than a century without a great deal of evaluation as to whether they’re working or even needed.

As an exercise let’s define some objectives for the Inflation Reduction Act and provide some KPIs for it. It’s not easy to synopsize a 273-page bill so let’s just use three of the objectives that have been widely publicized.

The objectives of the Inflation Reduction Act are to

• Reduce the rate of inflation as measured by the revised CPI by 1 percentage point over 5 years.
• Reduce the temperature based on the United Nations climate model by 1% over the next 5 years.
• Reduce the price of prescription drugs in the United States as measured by the MIDAS index by 1 percentage point over 5 years.

Are those its objectives? If not what would the correct ones be?

Both the Congressional Budget Office and Penn-Wharton think that the likelihood of the IRA actually reducing inflation is negligible. Those who have plugged the imputed impact of the IRA into the UN climate model have found that it didn’t do much there, either.

What are the key performance indicators for those objectives?

Please leave your own charters for the IRA and its KPIs in comments.

Here’s the conclusion of Matt Taibbi’s reaction to the coverage of the search of Mar-A-Lago:

We’re a week into one of the biggest stories of our time, and the feds and media have spent most every minute acting as an unembarrassed unified front. One after another, national security “analysts” lined up to give breathless, hyperbolic, and and eerily synchronized commentary about the Mar-a-Lago raid. If the message on day 1 was about how they “must have” probable cause of a crime, that was the word up and down the dial. If by the weekend it was “I’ve never seen this level of threat,” you heard that in more or less the same words from the likes of Mudd, McCabe, and others on multiple channels. What’s the public supposed to see, other than an American analog to China Central TV or Rossiya-1, when they tuned in to all this?

Long live the United State! Long live the Numbers!! Long live the Well-Doer!!!